Confidence in crypto is alive despite the collapse of Terra, as two major Wall Street players invest in Elwood Technologies, a provider of crypto trading software.
Barclays and Goldman Sachs have invested in Elwood Technologies, formerly known as Elwood Asset Management, hoping the $500 million company can attract institutional investment.
The recent upheaval in the crypto market saw 500 of the top digital assets fall by more than 50%.
The two Wall Street titans have joined venture capital firms Dawn Capital and the venture capital arms of Germany’s Commerzbank and Galaxy Digital, an investment-focused merchant bank, to pour money into a funding round planned long before Terra’s collapse.
Comparing to the recent failure of Terra, Elwood said the funding is focused on infrastructure rather than short-term returns.
Elwood sells software to financial institutions looking to enter the crypto industry through large investments. It works with banks, hedge funds, crypto exchanges and fintechs needing access to crypto trading data, by connecting Elwood’s proprietary software to current trading platforms.
“As institutional demand for cryptocurrency increases, we are actively expanding our market presence and capabilities to meet client demand,” said Matthew McDermott, head of digital assets at Goldman Sachs.
Elwood’s partnership with Bloomberg
In February, Elwood partnered with Bloomberg to combine Elwood’s crypto trading platform with Bloomberg’s order management system to allow Elwood investors to manage their crypto and traditional investments in one place. .
Last year, Elwood also sold $1 billion in blockchain-based fund assets to CoinShares. The deal was part of a larger deal with CoinShares to buy Elwood’s indexing business for $17 million.
“Unless the infrastructure is there and you don’t have confidence in the quality of the underlying architecture, you’ll never really get the volume to match the opportunity,” said Elwood CEO , James Stickland.
One of Britain’s most prominent cryptocurrency investors, Alan Howard, CEO of hedge fund Brevan Howard, is the founder of Elwood Technologies. He previously invested in UK digital asset depository Copper.co and Kikitrade, an Asian crypto platform.
Increase in Flows to Crypto Hedge Funds
Many traders believe that crypto is still ripe for hedge fund dominance, despite the many market inefficiencies.
In January, Howard unveiled a crypto hedge fund, BH Digital, seeking to capitalize on cryptocurrency price arbitrage, which oversees over $250,000.
“More funds are viewing crypto as a fifth asset class,” along with stocks, bonds, currencies and commodities, Galaxy Digital’s Robert Bogucki told The Wall Street Journal in March.
“In many ways, crypto trading is analogous to other trading assets, but there are different risks,” said Agustin Lebron of Raposa, a crypto trading firm. Hudson Bay Capital Management LP, a New York-based hedge fund, has seen a steady increase in profits in crypto management.
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